SEC Filings

Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:

Three months ended

Favorable/

Nine months ended

Favorable/

October 1,

October 2,

(Unfavorable)

October 1,

October 2,

(Unfavorable)

2017

2016

Amount

Percent

2017

2016

Amount

Percent

Heavy-duty

28,100

20,100

8,000

40

%

71,400

60,500

10,900

18

%

Medium-duty

68,500

53,400

15,100

28

%

200,400

171,100

29,300

17

%

Light-duty

66,300

49,800

16,500

33

%

195,000

168,600

26,400

16

%

Total unit shipments

162,900

123,300

39,600

32

%

466,800

400,200

66,600

17

%

Sales

Engine segment sales for the three months ended October 1, 2017, increased $477 million versus the comparable period in 2016, driven by:

•

Heavy-duty truck sales increased $151 million primarily due to higher demand in North American heavy-duty truck markets with increased shipments of 39 percent.

•

Off-highway sales increased $111 million primarily due to improved demand in global construction markets, with increased international unit shipments of 48 percent primarily in China and Western Europe.

•

Medium-duty truck and bus sales increased $108 million primarily due to higher demand in North American medium-duty truck markets with increased engine shipments of 41 percent.

•

Light-duty automotive sales increased $107 million primarily due to higher sales to Chrysler and higher sales of light commercial vehicles.

Total on-highway-related sales for the three months ended October 1, 2017, were 79 percent of total engine segment sales, versus 80 percent for the comparable period in 2016.

Engine segment sales for the nine months ended October 1, 2017, increased $829 million versus the comparable period in 2016. The following were the primary drivers:

•

Off-highway sales increased $261 million primarily due to improved demand in global industrial markets, especially in international construction markets, with increased unit shipments of 52 percent primarily in China and Australia.

•

Heavy-duty truck sales increased $232 million primarily due to higher demand in North American heavy-duty truck markets with increased shipments of 14 percent.

•

Medium-duty truck and bus sales increased $204 million primarily due to higher demand in North American medium-duty truck markets with increased engine shipments of 24 percent.

Total on-highway-related sales for the nine months ended October 1, 2017, were 79 percent of total engine segment sales, versus 81 percent for the comparable period in 2016.

EBIT

Engine segment EBIT for the three months ended October 1, 2017, increased $140 million versus the comparable period in 2016 primarily due to the absence of a loss contingency recorded in the third quarter of 2016 and higher gross margin, partially offset by higher research, development and engineering expenses and selling, general and administrative expenses.

Engine segment EBIT for the nine months ended October 1, 2017, increased $243 million versus the comparable period in 2016 primarily due to the absence of a loss contingency recorded in the second and third quarters of 2016, improved gross margin and increased equity, royalty and interest income from investees, partially offset by higher selling, general and administrative expenses and higher research, development and engineering expenses. Major components of EBIT and related changes to EBIT and EBIT as a percentage of sales were as follows: